Foreign firms expand their production line in Vietnam to gain benefits of TPP trade pact

Foreign firm have started expanding their production line or starting production in Vietnam investing billions of U.S. dollars in anticipation of business opportunities the Trans-Pacific Partnership will bring which is due for completion in the near future.

Nobland Vietnam Co. Ltd., an apparel company based in Ho Chi Minh City plan to increase its investment to $61 million from $43 million, intending not only to receive more orders, but to grab the chance when Vietnam joins the TPP. Under the plan, 24 new production lines are being installed, which will help increase the company’s capacity to 72 million of products a year from the current 64.2 million. Nobland Vietnam will also recruit 2,000 new employees to expand its workforce to 10,000, according to the general director.

Meanwhile, in the southern province of Binh Duong, Nam Phuong Textile Co. Ltd., a joint venture between Hong Kong’s Haputex Development Limited and Vietnamese Viet Huong JSC, is building a new plant to embrace the TPP.

The company began construction on the $120 million fabric making facility only 20 days after receiving an investment license in November 2014.
Nam Phuong Textile is expected to export 90 percent of its products to the U.S., and the remainder to Japan during its first phase of operation, which will begin late this year.

The company director, Marcus Ip, is confident its products will be more advantageous and competitive when entering TPP-member countries.

Also in Binh Duong, Japan’s Tomoku Group has inaugurated a $47.6 million plant at the My Phuoc 3 Industrial Park, only a year after its project was licensed. The facility is ready to begin production by the end of this month, informed general director Takashi Nara.

Tomoku has partners around the globe but the Binh Duong plant is its first-ever overseas facility. The Vietnam investment is the first step in the company’s plan to expand into the ASEAN market.

In 2014 nearly 600 foreign direct investment (FDI) projects increased their registered capital by a total amount of $4.58 billion, whereas 1,588 new projects, with a total registered capital of $15.64 billion, were licensed, according to the Foreign Investment Agency.

The total FDI disbursement last year topped $12.35 billion, 2.9 percent higher than the country’s target, data from the agency under the Ministry of Planning and Investment show

The TPP is a proposed regional free-trade agreement aimed at eliminating tariffs and reducing non-tariff barriers that is being negotiated by 12 countries throughout the Asia-Pacific region.

The countries include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam, which collectively contribute almost half of global output and over 40 percent of world trade, according to the Office of the United States Trade Representative.

One of the challenges facing the Vietnamese textile and garment businesses is the “yarn forward rule of origin,” which means that all items in a garment from the yarn stage onward must be made in one of the countries that is party to the TPP agreement, according to the American Chamber of Commerce in Vietnam.